A Big Win in the Second Circuit for Vimeo and the DMCA Safe Harbors (Post 1 of 3)

June 16, 2016

What follows is the first of three posts on today's long-awaited decision by the Second Circuit Court of Appeals in Capitol Records v. Vimeo.

Capitol’s lawsuit against Vimeo, running in federal court in New York since 2009, raised important and unsettled questions concerning the scope of safe harbors for online intermediaries under the Digital Millennium Copyright Act (17 U.S.C. § 512)—questions remaining in the wake of the same court’s landmark decision in Viacom v. YouTube (2012). Three issues were in play in this case: (1) whether the safe harbors—which are a creature of federal copyright law—may be raised as a defense to allegations of infringement involving pre-1972 sound recordings, which are not within the scope of federal copyright law; (2) whether a service provider can be charged with “red flag” knowledge of infringement if its employee views a video containing all or almost all of a popular sound recording; and (3) whether Vimeo showed “willful blindness” to its users’ infringements and was thereby disqualified from the safe harbors.

(1) Applicability of the Safe Harbors for Infringements of Pre-1972 Sound Recordings

Sound recordings made prior to February 15, 1972 are protected by state, not federal copyright law. Capitol Records and its co-plaintiffs argued on that basis that federally created safe harbors from infringement liability should not apply to claims alleging infringement of the copyrights in those recordings. The district court accepted that argument “without discussion,” based on an analysis (from 2011, during the course of the litigation) by the U.S. Copyright Office. The Second Circuit today reversed that holding, criticizing the Copyright Office in exceedingly polite but strong terms for a wrong interpretation of the statute and a misapplication of canons of construction. The court acknowledged that it should give "appropriate deference to [the Office's] reasonably persuasive interpretations of the Copyright Act," but it concluded that the Office's interpretation in this instance did not fall under that umbrella.

Rejecting outright the Office’s interpretation of the statute, the Second Circuit began its analysis with the premise that the safe harbors provide a defense for claims of “infringement of copyright.” Whereas the Copyright Office maintained that the statute defines “infringement” exclusively as the infringement of federal copyright, the court pointed out that the Act contains no definition of “infringement” that is thus limited. In fact, the Act contains no definition of “infringement” at all. It provides a statutory remedy for the infringement of federally created copyrights, but that’s not the same as saying that it precludes a statutory defense for the infringement of state created copyrights. Moreover, the court said, if Congress had intended to limit the range of infringements covered by the safe harbors to those involving federal copyrights, it could have followed the words “infringement of copyright” in section 512 with the phrase “under this title,” which appears in many other places in the statute. It didn’t. And that, the court said, was no accident.

Moving from the language of the statute to the underlying policies, the court concluded that Congress did not intend to limit the scope of the safe harbors to infringements of federal copyrights when it hammered out the compromise embodied in the DMCA. The purpose of the safe harbors was “to make economically feasible the provision of valuable Internet services while expanding protections of the interests of copyright owners through the new notice-and-takedown provision.” Had Congress left pre-1972 sound recordings out of the DMCA calculus, service providers would have remained exposed to a large swath of the potentially crippling liability from which the safe harbors were intended to insulate them. As a matter of policy, such a bifurcated (i.e., federal vs. state) and partial approach to limiting liability makes no sense. Thus, the court held, the DMCA must be read, as the statutory language dictates, to include safe harbor from damages for infringements of state copyrights, including those on pre-1972 sound recordings.

The court’s analysis of the pre-1972 issue in this case is perhaps most remarkable for its pointed critique of the Copyright Office’s interpretation of the scope of the safe harbors. Over the years, the Office has consistently taken official positions that favor corporate right holders, even in cases where the statute is readily or reasonably susceptible to readings that support other interests and outcomes. It is unusual, however, to see a court take so dim a view of the Copyright Office's input on a matter of substantive copyright law. This decision is also notable because it clears up some (though by no means most) of the current chaos confronting online services with respect to copyrights in pre-1972 sound recordings.